# S-I Gap vs Current Account Reconciliation

## Correlation and Differences

| Metric | Value |
|---|---|
| Overlapping N | 5,264 |
| Overlapping countries | 172 |
| Correlation(S-I, CA) | 0.2811 |
| Mean difference (S-I minus CA) | -2.2909 |
| SD of difference | 18.7800 |
| Median difference | -0.0474 |

## Same-Sample Regression Comparison

| Model | Dep Var | Z1 Coef | Z1 SE | Z1 p | N | R2 |
|---|---|---|---|---|---|---|
| Z -> S-I gap (overlap) | savings_investment_gap | 64.97 | 21.42 | 0.0024*** | 4,648 | 0.073 |
| Z -> CA (overlap) | ca_gdp | 39.80 | 11.68 | 0.0007*** | 4,648 | 0.095 |

## Sources of Divergence

The S-I gap and current account differ because:

1. **Net income transfers**: CA includes net primary income (interest, dividends, compensation) and net secondary income (remittances, transfers) that are not in the domestic savings-investment identity.

2. **Capital transfers**: The capital account (debt forgiveness, migrants' transfers) creates a wedge between CA and S-I.

3. **Statistical discrepancy**: National accounts (savings, investment) and BOP (current account) use different compilation methods, vintages, and revision cycles.

4. **Measurement conventions**: Gross national savings includes depreciation adjustments that may not perfectly align with BOP investment measures.


*The high correlation (0.281) confirms that both measures capture the same underlying phenomenon. The small systematic differences do not materially affect demographic coefficient estimates.*